Vector and United Networks are shifting away from a volume-based pricing methodology in favour of a peak demand weighted tariff structure.
From April 1st, large customers in Central and South Auckland will see little advantage in seasonal Summer Day prices as these are aligned to a reduced Winter Day rate/kWh while the demand tariff will increase by 12.8%. North and West Auckland customers on non-demand time of use metered load groups will be transitioned over to a new pricing plan that includes a peak demand charge.
Added to this is the continuation of the stepped increase to the Power Factor tariff. Customers with reactive load problems will be in for even bigger charges as the rate per reactive unit increases from $2.00/unit to $8.00/unit. Based on discussions with the energy retailers, this charge will again be increased to $17.50/unit from April 1 next year.
What does this mean?
For Central and South Auckland customers with non-seasonal based peak demands with small Power Factor issues could see overall network cost increases of greater than 9.5%. For a similar North or West Auckland customer being transitioned onto the time of use metered load group with demand charges this increase could be greater than 15%.
Why change to a demand tariff structure?
Peak demand-based pricing methodologies are in line with upstream cost structures charged to the North Island based regional network owners by Transpower. It is a necessary measure to fine-tune New Zealand Inc. for productivity and to optimise the power supply network. By creating incentives for large business to try to flatten their demand loads and remove Power Factor issues, this increases security of supply and delivers greater value out of the existing network infrastructure.
How can businesses minimise the impact of these charges?
The simplest way to improve and reduce Peak Demand and Power Factor costs is to ensure that these are measured and monitored accurately. Armed with this knowledge, decisions can be made to improve or correct issues altogether. Completing Energy and Efficiency Conservation Authority (ECCA) based audits are a good way to explore solutions that may lead to the installation of variable speed compressor motors, demand control systems that shed non-essential load at peak time and the installation of Power Factor Correction equipment on a machine or site-wide level. It is vital that the appropriate solution is implemented – installing the wrong equipment can be worse that doing nothing at all, so professional and independent advice is essential.
The benefits of optimisation
Optimising your peak demands and Power Factor will bring a range of benefits to your business:
– Reduction of power bills by cutting network charges
– Increased performance and capacity of your electrical system
– Improved power quality
– Increased efficiency and reduced heat loss
– Prevention of voltage drops
In most cases proactively monitoring energy usage and installing correction equipment can remove the penalty charges and reduce overall network costs. , so businesses are advised to seek independent specialist advice.
To find out more about these changes from independent specialists, contact Total Utilities today.